securing rural livelihoods through inclusive business models(ibms) lessons from uganda
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Securing Rural Livelihoods Through Inclusive Business Models(IBMs) Lessons from Uganda 26 th -27 th April 2013 Presented by:Connie Magomu Masaba Project Manager At the PAP/EALA Seminar in Kigali, Rwanda. Inclusive Business Models (IBMs). - PowerPoint PPT PresentationTRANSCRIPT
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project – Phase II
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Securing Rural Livelihoods Through Inclusive Business Models(IBMs)Lessons from Uganda
26th -27th April 2013
Presented by: Connie Magomu MasabaProject Manager
At the PAP/EALA Seminar in Kigali, Rwanda
Inclusive Business Models (IBMs)
involve close working partnerships with smallholder farmers and communities,
share value among the partners.
Include smallholder farmers in mutually beneficial business relationships with clear enforceable agreements
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project-2
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Recent developments in the agric sector
Increasing interest in Agriculture by Private sector- FDI and local entrepreneurs Governments slowly increasing investmentSome banks getting interested in lending to sector
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Role of Smallholder farmers
The approximately 500 million smallholders are main investors in agric. in developing countries. Smallholders support a third of the global population,produce up to 80 per cent of food in t developing world.
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Smallholder needs for effective contribution
secure land and natural resource rightsbetter access to inputs, technical expertise,agro-processing and other off-farm opportunities,Financemarkets.Effective Partnerships /involvement in Agric. business
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Inclusive Business Models- a Ray of Light
Also referred to as responsible investments Recognize role of smallholder farmers as active partners in agribusinessMutually beneficial and sustainable partnerships make good business senseTake into consideration social, environmental and economic soundness of investments
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Characteristics/properties of effective IBMsOwnership
Voice
Risk
Reward
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Uganda - Oil Palm Development as an IBM
PPP with smallholders as effective partnersFunded by IFAD, GOU, Private sector partner (Bidco) and farmersNucleus estate/Outgrower scheme modelImport substitution effort- Palm oil most imported agricultural product in Uganda (USD 177 million in 2011)
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Uganda- Oil Palm Devt.Oil Palm highly productive,- 4tons of oil per Ha per year harvested monthly so giving farmers high and steady incomes over 25yearsProject meets the needs of the smallholder farmers to effectively contribute to developmentGovernment has effective role in the partnership with farmers and private sector partner
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Establishing the partnershipAgreements in place with secured interests of all partnersTransparent process of getting private sector partner- advertised the tenderSensitization and involvement of the communities from start of projectOwnership, voice, risk and reward clearly exhibited in partnership
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Ownership:Farmers own 10% of investment and Private sector own 90%Farmers own their own plantations (3,500 ha) while Private sector owns 6,500 ha of oil palmsOver 1500 farmers participating as smallholders with about 600 women farmersSome farmers supported to acquire land for production
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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VoiceWith 10% shareholding, farmers have 2 positions on the board of the agribusinessFarmers represented on the Oil Palm pricing committeeFarmers represented on the services cost panelFarmers organised in farmer organisation with leadership democratically elected right from grassroots (units, to blocks to district level)Hold an annual general meetingFarmers consulted on issues that affect them, before implementationWomen take at least one third of the leadership positions
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Risk SharingPrice fluctuation due to changes in international prices. Prices tagged to international price and determined thru a pricing formula- farmers aware.Farmers access loans for production that are recovered from their sales. Risk on non performance secured by group guarantee arrangementsPrivate sector absorbs palm oil market risk- has to buy all farmer produceGovernment absorbs risks of failure of oil palm performance due to natural causes
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Risks cont’dFarmer lands not security for loan hence confident of their land- plantation is security in itselfFfb inspector stationed at the mill to ensure no unwarranted rejections of farmers produceDemand for palm oil still high in the region and currently met by importsFarmers get import parity price
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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RewardIncreased incomes for farmers(USD150 per acre per month for mature plantations Assured of a market for producePricing formula assures farmers of a good price for ffbValue addition (mill and refinery in place for processing)Access to technical know how, improved seedlings and inputsImproved road network (750 km of road network)Employment creation (2000 employed on nucleus estate, 500 in farmer gardens and over 1500 directly as farmers
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Reward Cont’dIncreased investment in agricultural sector through FDI (USD 120 million)New income generating activity hence less dependency on lake and forestsFarmers have a say in decisions around price and servicesFarmers in some cases receive services from nucleus estate- land clearing, planting, managementTax income for government form new industry- Refinery and mill
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Impacts of ProjectEarly results
Improved land rights Increased incomesCreation of employmentimproved infrastructure facilities and services
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Lessons Learnteffective partnership between rural smallholders and the private sector possiblegovernments play a positive role choice of the business partners- must have a heart for the rural peopleinclusion of smallholders in all decision-making processes importantbuilding partnerships takes time
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Role of Parliamentarians In IBMsEnsuring a conducive business environment for both the investors and the farmersLegal framework that supports IBMs/PPPsMonitoring of activities to ensure win win situation for all the players in the businessFacilitate confidence building among the partnersSupport efforts that bring investments into the Agricultural sectorSupport joint venture with Government as an active investor in the interim, then Government can divest its shares
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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ConclusionBusiness models that support local farmers are more promising and make good business senseFarmers have proved to be highly dynamic and responsive to market forcesSuccess of IBMs depends on the level of ownership, voice, risk-sharing and benefit-sharing between partnersRequires sustained support by a range of service providers (government, civil society, private sector)
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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Finally,
Rural people should be:
part of the solution for global food security
a priority for governments, the international development community and any other investors.
Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project
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